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Macy's Poster Child For Zombie Retailer

I was driving to an event last week and realized I hadn’t packed socks. No big deal, saw a big mall with a Macy’s. Easy.

I went into the store and felt like I was entering a ghost town. Not due to customers but I saw NO ONE at six service stations. The entire men’s side of the store was devoid of anyone.  I found the sock area disheveled, like someone was supposed to straighten up but was told to “go home – schedule won’t permit overtime.”img_0250

I picked out my socks and went to a register – which  was empty. I strolled back to china and gifts – empty.  Kitchenware? Empty. Back to men’s – there had to be someone.

Sure enough, a woman had flagged down an employee and was being rung up.

The employee greeted me, thanked me for waiting and apologized for the wait.  That’s all anyone could expect.

After five minutes of my waiting, she said she couldn’t get the security tag off and would be back. About that time another guy showed up to be rung up behind me. We waited another five minutes. Now I was upset.  Wanting to ditch the socks but thinking better of a barefoot speaker I went to the cosmetics counter. “Can you help me?”

“Yes sir,” was the answer. The woman apologized and rang me up.  I asked her if this was, as I suspected, common.  She admitted it was which really hurt because she had been there forever, was a commissioned salesperson and doesn’t make anything on merch she rings up in other departments.  She said the employees are trying to do their best but cutbacks have meant nothing but frustration.

For those of you not sure of the enormity of the problem. Here is their store map, the first floor is 70,000 sq ft. macys-mapWe are talking 35,000 sq feet being run by three visible employees!

We’ve heard alot about zombie banks lately.  Welcome to the world of Zombie retail.

This store was dead and it didn’t know it; the racks were strewn with closeout merchandise, customers were trying to buy, employees were doing the best with what they could.

By the way, this is NOT one of those slated to be closed.

Terry Lundgren, CEO gets high marks from the media and PR firms for his Terry J. Lundgren Center for Retailing at the University of Arizona.  But how can you say we are developing the new retail leaders because people don’t think it is a noble profession on one hand and treat existing customers and employees this way?

How did Macy’s get this way? A recent story in Marketplace says Macy’s “will reward its executives based on how well the company’s stock performs compared to a pool of 10 competitors.” Also in the article, Burt Flickinger  a consumer industry analyst for SRG Insights said, “The department-store sector has been slowly dying for years, and many of the major chains may be dead within a couple quarters. And Macy’s is doing a heroic job to hold on.”

Zombies held on. You want to compete? Look at what you are doing to your customers and employees before stock bonuses or feathering your own nest. Don’t schedule yourself out of existence.

(I’ve written about Macy’s in a couple other posts, most notably about their PR firm here.)

Retailers Discounting Their Way To More Holiday Red Ink

images-2One of this blog’s readers, Paula from San Francisco sent her recent shopping experience to me.  ”Today I spilled coffee all over my top and decided to run over to the mall to see if I could find a replacement.  My goal was to find a sweater in a basic style, color, not wool (I’m allergic), that fit me , cost less than $90, and that I didn’t hate.  And I only had 45 minutes to do it.

First stop was Macy’s.  I wandered around for 10 minutes or so in the higher-end sections to no avail, before spotting a 25% off rack in the petites section.  At the nearest counter I asked where Charter Club was for regular sizes, but was told that they’d all been “moved to a store at another mall to make room for coats.” There was no followup inquiry as to what I was looking for.  Clearly they didn’t want my business.
 
So I left Macy’s, now really pressed for time, and went into the next clothing store I came to, Chico’s. In about 30 seconds a salesperson approached, asked me what I was looking for, suggested I try on a sweater I was carrying around, brought me a different size, pointed out a couple of other possibilities.  I decided I liked the sweater, and asked her if they had some plain black tops.  She pointed them out, noted that they were buy one, get one half off.  I tried on the top, picked out another one in a different color, the salesperson cut the tags off the top and the sweater, put my coffee stained ones in a bag, and I was on my way and back at the independent bookstore I work at with a couple of minutes to spare.
 
So, that’s a pretty straightforward tale of two chainstores.  But, there’s something that keeps bothering me about it.
 
The two tops I bought were priced at $32 each, and the sweater was $88, for a total of $158 .  With the buy one, get one half off promotion the tops came to $48.  The salesperson found me in their database from previous purchases, and somehow because of that I was eligible for a 50% discount on one item, which she applied to the sweater.  So my total was $92, a 42% reduction from the list price.
 
Naturally, I liked paying less.  But how can Chico’s make any money on that?  I had no problem with paying $88 for the sweater.  

42% off would be our entire margin where I work.  If you’re discounting that heavily how do you pay your employees and your rent?  I saw a list somewhere on 10 Retailers That Could Fail, and Chico’s was on them.  It made me sad to think that they could go away.”

Thanks for writing Paula!  Two points come to mind. #1 service can drive sales more than promotions. #2 well meaning employees will discount at the drop of a hat.

Paula’s experience showed the difference between these two stores.  Macy’s knew why the sweaters weren’t there, Chico’s helped her find more than one item but Paula’s surprise discount was used improperly to lower sales rather than boost them. 

We are going to see a lot of red ink in the next few months from major retailers whose CFO said to their CMO, “We’re in a recession now.  We’ve got to do something to bring them in – anything.”  But sales without profits can be worse than no sales. And crew members not trained to maximize profits can hurt as much or more than the discounts.

An article in today’s Wall Street Journal talked about Neiman Marcus, “Gross margin fell to 37.3% from 41.1% due to markdowns, as the company continues to pare inventory. Neiman said it sees higher markdowns putting pressure on margins in its fiscal second quarter.”

My next post will be on why employees discount. Stay tuned!

How Sarah Palin Helped Lose John McCain’s Election

When Ms. Palin burst onto the scene in early September, she was presented as a middle-class everywoman.  Images of her hunting moose, holding her babies, shopping at the local store in Wasilla, Alaska all supported that image.  It connected with rural woman and men proud to see “one of their own” on the national stage.

As information was reported last week, the image the RNC wanted her to portray of an ordinary hockey mom conflicted with the reality of clothes from Saks and Neiman Marcus.  A $2500 designer jacket made the everywoman image a mirage – she was every bit a woman out of reach and possibly out of touch with the every woman they wanted her to be.

Michelle Obama was on David Letterman the night of the report and referred to her own outfit from Target. Ouch.

And by anyone’s account those Katie Couric interviews of Ms. Palin did not show she was ready to lead the most powerful country in the world. 

My point to business owners is that while ad agencies large and small are getting more work than ever to come up with powerful messages and branding, it can’t be an image that is in conflict with reality.  You don’t get points for deceiving people, they shut their wallets or close their ears to you.

For example, you can’t show a picture of friendly, helpful employees unless you actually have them.  Marketing can’t do the heavy lifting of the actual experience.

Regulars will look past the dirt, the pieces of leftover Valentine’s decorations, yellowing tape on the windows, broken or cracked counters, etc. and wait for your employee to wait on them.

But new customers will take notice. After all, they were attracted by something – your clever ads, your mailers, your sponsorship of the local charity, etc.

When people are willing to give you a look, make sure it is consistently the real deal – not a mirage. Are you listening Macys, Lord & Taylor, and Brooks Brothers?